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The market for legal online sports betting in Tennessee continues to grow, not only showing that it has not yet reached maturity but also that there is great potential for online casino play in the state. Speaking to that strength, February 2024 saw the highest number of dollars wagered using Tennessee sports betting apps in any such month yet.
While the new February record represents substantial growth in a year-over-year comparison, that prompts thoughts of when the other shoe will drop. A time frame could be difficult to decipher but what is more certain is that Tennessee is currently forfeiting tax revenue.
Tennesseans establish new February high for sports bets
According to the Tennessee Sports Betting Council, residents of and visitors to Tennessee placed more than $380.3 million in bets using the state’s licensed online sportsbooks during February 2024. That’s almost 14% higher than the amount TN sports fans gambled in February 2023 and a new record for the month in the state.
That activity also keeps the current fiscal year on a strong upswing for dollars wagered using those same apps. Through February, the current fiscal year has seen more than $3.1 billion in bets.
That figure represents an uptick of about 13% compared to the first eight months of FY2022-23. The council does not disclose how much of that money bettors have won.
However, the council does share adjustments to the total of dollars wagered and how much Tennessee can collect from that activity in tax revenue. For February 2024, allowable adjustments came to $2.1 million, and the state’s cut is more than $6.9 million.
While these numbers show that Tennessee’s online gambling industry is still growing, that tax total is probably a shell of what it could be with further expansion.
Online casinos might produce multiples of monthly tax revenues
With 14% year-over-year growth in February, it’s difficult to say when demand for online gambling in Tennessee will have reached its limit. What’s clear is that it has not happened yet.
The council stopped sharing how much of the sports betting totals that books won in June 2023. Based on previous numbers, that percentage could work out to an average of around 10%.
That infers Tennessee’s sportsbooks may have won around $38 million in February 2024. Without adjustments, a 20% cut of that total would have represented about $7.6 million in tax revenue for Tennessee.
Prognosticating further to assume that would be a tax rate for legal online casino play in the state, Tennessee is probably forfeiting tens of millions of dollars in tax revenue every month by keeping such gambling for real money illegal.
For reference, online casino revenue in Pennsylvania for January 2024 was over twice what sportsbooks brought in during the same month in Pennsylvania. Using that as a parameter, that would suggest revenue from online casinos in Tennessee during February might have equated to about $80 million, leading to around $16 million in tax revenue for Tennessee.
Naturally, these numbers are mostly conjecture. Additionally, there is no momentum toward expanding online gambling to include online casinos in Tennessee. The simple math based on the actual sports betting numbers suggests that the state’s tax haul could be far larger, however.
